A report from the Australasian Railway Association highlights one of the reasons why investing in public transport can be so useful – it allows people to save money and in some situations a considerable amount. The report titled The Costs of Commuting: An Analysis of Potential Commuter Savings compares estimates of the cost of commuting by car with the costs for using PT to get to work. It also compares the costs based on just leaving their car at home with not having a car at all. The key findings for NZ are:
- The average New Zealander commuter pays $11,852.98 per annum in car ownership and running costs
- For those that decide to not own a car and commute with public transport instead, New Zealand commuters on average can potentially save $9,065.78 each year.
- On average, if a New Zealand car owner decides to leave their vehicle at home and use public transport to commute to work, they can potentially save $2,119.03 a year
However in the case of Auckland and Wellington those costs could be even higher as the analysis uses what they call a “conservative estimate” of $1,000 per year for parking costs. That works out at about $4 per day which in some parts of Auckland like the city centre, is way less than you can find a carpark for. Further they also haven’t taken into account other vehicle costs such as insurance, or non monetary costs such as the costs to the environment or from congestion. Similarly on the PT side the analysis hasn’t considered potential upsides to PT use such as being able to use phones/tablets, read a book, have a sleep, socialise or even be productive and work.
The estimated savings for the various cities in the study are below.
The savings are further broken down depending on the size of the vehicle being driven.
One big issue I do have is that it appears the authors of the report have only chosen to compare the costs for a two locations at the extremities of the rail network which in the case of Waitakere is one of the least used stations in Auckland.
Despite its limitations I do think the point that PT can save individuals (or households) a considerable amount of money is an important one and it highlights why we need to build projects that make the PT system more useful. By doing so it means more people are able to use the network and in turn benefit from the savings provided. It also means that households may be able to drop from three cars to two or from two cars to one saving them even more money and space.
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I accept these kinds of analyses as valid, but the flaw is that drivers don’t think like analysts. If you ask a car owner what his costs are he will first say petrol, then maintenance. Those are direct out of pocket expenses. Items like depreciation and the car payment are less obvious because depreciation is invisible, and the car payment is one of those things that has to be paid anyway. The distinction is like capital costs versus operating costs. So the numbers may be right but it’s a an academic approach and a bit too abstract to influence behaviour. (And the Railways Association my have a bias.)
Depreciation isn’t uniform – for a lot of the older vehicles in our fleet, they’ve realistically depreciated as far as they can go. Short of my Corolla exploding, it’s not going to be worth any less than it is now.
Particularly with an average vehicle fleet age of 13 years. Depreciation is on the order of hundreds of dollars per year at that point, if even that.
You won’t find any agreement from the economists in here on that point, though.
I think most people have a fairly good idea of their costs and are good at optimising. They are paying $2k per year to drive plus $1k for parking presumably because they get more than $3k in value from driving. I wouldn’t take a job in town unless the additional pay more than covered the cost of running a car.
“…the flaw is that drivers don’t think like analysts”
As an economist, I would (mostly) disagree with this statement. I think that _once_ you have made the decision to own a car, it is usually rational to drive. (Parking costs can, obviously, affect this calculus quite a bit, because they are much, much larger than other operating costs.) But you have to think of this as a multi-stage game: people periodically re-evaluate whether they need to own a car.
I would also argue that when people re-evaluate their car ownership, they are acting (mostly) rationally. If they have an abundance of alternative transport options available to them, they will be less likely to own cars. This is clearly shown in the Census data on household car ownership. It’s also why it’s so crucial to provide high-quality, useful rapid transit networks, bus services, and safe walking and cycle infrastructure _everywhere_ in our cities – because there are relatively few places that actually give people a choice.
However, I take your point that people don’t always perceive all of the variable costs of operating a car – we’re bad at accounting for wear and tear, for example, or the risk of a tyre puncture. But these unperceived costs wouldn’t in themselves change most drivers’ day-to-day decisions.
Yes, but as an economist I will point out that the reasoning you just went through is not an academic review of the issue, more grounded in realities of the ordinary person (ordinary in this case meaning not an economist, or rock star). Even when people re-evaluate the need for a car, a process which can take nano-seconds, they are not considering depreciation and normal wear and tear very much. They’re thinking of cost of fuel, parking if applicable, and insurance. A lot of people, like me, have a car and never use it for commuting (when travel options are most numerous). My car is sitting there depreciating away, but it affects me not at all, financially or otherwise because I don’t intend to sell it any time soon. I think this comes into play much more directly if a car is leased. In that case you know up front what the depreciation is going to be.
Day to day decisions are different from the decision to buy a car in the first place. Do I take the car today or the ferry? A typical choice for me because sometimes I go to Clevedon for a riding lesson*. Because those choices need to be made from time to time is why people who would rather not commute by car have one anyway. (That line of reasoning extends to why electric cars aren’t selling.) It isn’t rational. People aren’t rational (and the market isn’t rational either despite the theories).
I would love it if people are so economically savvy that their analysis of car ownership is as comprehensive as that in the Railway Association study, but by and large, it isn’t. The trick is, as we here all know, is to make public transport so attractive that any other choice is inferior.
*The lesson alone is expensive enough without adding the cost of parking downtown all day, even if it does save 15 minutes.
I think we agree on the essentials here – which is captured well in your point about fixed versus variable costs. (Or, alternatively, depreciation being perceived as an intermittent cost rather than a variable one.)
However, I have to disagree with your characterisation of economics: “the reasoning you just went through is not an academic review of the issue, more grounded in realities of the ordinary person (ordinary in this case meaning not an economist, or rock star).”
My view is that economists should _always_ try to make contact with reality. This often means thinking about how an ordinary person would make decisions when faced with certain choices and trade-offs. It’s often more useful to try and figure out _why_ people chose as they did rather than simply telling them that they need to mend their irrational ways.
Definitely think your policy recommendations take that idea on board: “The trick is, as we here all know, is to make public transport so attractive that any other choice is inferior.”
Another good trick is to buy a used car that has very high depreciation in the early years, then you’re ahead of everyone else. That’s something else I did. The Volvo will last longer than I will, and I’ll lose very little in value (so will the car).
$10,000 a year is a nice bump in salary. I’d like to find out how those costs break down as well – the claim is that you spend $5000 on a car even if you don’t use it at all.
The report uses AA supplied costs, like the one below, which are based on cars that are three years old so depreciation is quite high.
http://www.aa.co.nz/assets/site-information/running-costs/2013-Petrol-Running-Costs.pdf
Obviously many have older cars, so the savings shown on the second bar chart won’t be nearly as high, but this is a useful attempt at quantifying the benefits all the same.
although on the other hand, older cars tend to have poorer fuel economy, increasing the per/km running cost
– but this is probably not enough to outweight a big increase in the vehicles value…
Most have older cars. Average age of our vehicle fleet is 13 years, and there’s a hell of a lot of daylight between three years and 13 years.
For what it’s worth, their results are broadly similar (although not identical) with what I got when I looked at the costs of my commute: http://greaterakl.wpengine.com/2014/11/13/can-public-transport-save-households-money/
The big difference is that this report seems to have used AA’s figures for the cost of owning a _new_ car, which is not quite accurate given the fact that many if not most NZ households tend to buy and operate _old_ cars. I ended up with a much more conservative figure for the annual cost of vehicle ownership than they did.
It would be great for AT to have a “How much can I save?” calculator on their website (and to also market this way of thinking about PT).
By popping in a few variables like:
> to/from (home location /work/study location)
> car size and age
It could compare the car costs and the PT costs based. Having the 2 side by side with a SAVINGS amount would be great.
In terms of Marketing this around around the city billboards showing the difference between the local train and medium car (with fine print calcalation caveats underneath).
e.g. From Papakura a billboard
Travelling to the CBD?
Car image with dollar amount inside = $10,000 p.a. Train image with dollar amount inside= $2,280
“Are you saving time and money?”
Excellent idea.Also peak hour travel time comparisons. Do that each Station area to CBD after electrification give a tick or cross and after CRL cross not completed yet.
Since the Railway Association has done the work for them, it would be an easy matter for them to use that data.
The ‘are you saving time’ bit would be highly subjective.
I saw this on One News. Gosh the AA really annoy me.
http://tvnz.co.nz/national-news/enough-money-being-put-into-public-transport-in-nz-6221537
Whichever way you do the numbers obviously PT is cheaper and no unexpected big costs that can happen sometimes. I think the weak link for PT is now obviously bus in Auckland. The 1000 are not being fully utilized, and the ones that are , are not on efficient circuits and no bus priority or about 1% of what it should be. Both easily fixed in my opinion. 2030 CFN plan has the rapid core network, AT plans have 15 min service and bus just needs to muscle into the network with bus symbols and take a lane. This will bring bus up to 4 star and makes full use of the Class A network that is really gaining momentum at 18% and will skyrocket when the bus net is out fully and especially if we up resource future rapid core to a high frequency like 3-5 minutes. Then bus is a weapon that eats congestion and will even help car.mode as better use of that one lane capacity wise.
So congestion is costing us $1.25b per annum or how many drivers right now 700,000? or $2k each so that would also go on top? But then more people using PT reduces that as congestion clears.It seems car mode paying $2k in extra car parking for PT is actually benefiting not just a stick. I say after car generously gives one lane to bus – naturally gives PT a major boost and will reduce congestion. If congestion still an issue after 2 years then charge equivalent congestion to car via carparking or in other words required to keep motorway at 100%. This is a win-win for both modes and congestion mitigated by 2017 regardless and both modes are helping each other out for a change not to mention less wasted petrol and emissions, and minimal road widening just for busways which are public benefits of working together.
People like driving because they get to choose the time of their departure and route. Given these simple attributes, driving’s popularity dwarfs all other commuting methods, even with the added cost compared with buses, trains, carpooling, and bike sharing. The key missing mode of transport is the electric narrow commuter vehicle which if introduced as a public lease option (like highway bike sharing) can eliminate traffic congestion and make money for the provider. https://www.youtube.com/watch?v=rXCycmCVqD0 Auckland, Perth, Seattle, and Chicago are making inroads in this transportation design game changer.
You like driving maybe. I dislike it. If you live in a city with a real transit network, you can choose your time of departure and route easily. Trains every 2 to 5 mins in Tokyo and as a result the city has less road congestion than Auckland and is much more pleasant as a result.
Where I live, the suburbs are too spread out for train schedule convenience. However, car design and attribute innovation are very promising. With automated driving tech, I would be able to ride to my destination on a non-congested road in a private narrow electric car with door to door service. Unless connected with automated driving tech, trains will not be able to match the convenience or privacy.
Convenience: Yes, the likelihood is that a car taking its occupant(s) directly from origin to destination will be more convenient than a train, unless of course it gets caught in congestion. But the difference in convenience between these two modes shrinks away the better the overall PT service becomes. And the better the PT service becomes, the more land-use patterns will mold themselves around it to avoid suburbs that are “too spread out for train schedule convenience”. http://en.wikipedia.org/wiki/Oslo_Metro#mediaviewer/File:T1300,_T5_1313,_Valler_HKG.JPG
Privacy: What is it with this aversion to travelling in a train with other members of the public? Sure, one may occasionally have a journey spoiled by jerks or overcrowding, but there are plenty of ways in which jerks or congestion can ruin your SOV journey as well. For the most part, the social aspect of public transport can be one of its strong points. http://thehappycity.com/commuting-happiness/
Regarding convenience, train delays and infrequencies are comparable inconveniences to traffic congestion. It needs to be recognized, too, that the segregation of train track space creates turmoil during construction and frustration by precluding travelling by other modes unless built like an elevated train, monorail, or new proposed straddling bus which is a bus, not a train. http://www.youtube.com/watch?v=eR31fGanCpg&feature=youtube_gdata_player
As for mode switching happiness boosting, I support switching from driving alone in ill-suited side by side seated cars to right-sized ultra-narrow e cars. Every experience I’ve had personally and seen online suggests drivers enjoy them in ways similar if not surpassing bike and motorcycling commuting.
Adding an automated driving attribute, commuters not having to concentrate on driving would be able to interact with fellow automated car commuters as travelling close by would allow. The narrow design of the car would add to the ability to interact on either side of the car. Indeed, it’s probably likely to program clustering automated driving in a socially pleasurable manner.
In the meantime l have just above advised how you could get car of any width, PT fully operational and congestion on motorways gone in 2 years. Plus protected cycle possible too by removal of flush medians and parking on arterial roads only. Does your proposed solution do that and get rail, bus, cycle and car humming
Given the incredible popularity of single occupant driving, I think it’s unlikely that bus riding, even with segregated lanes, will ever achieve the popularity of commuting alone in a car and, thus, won’t lower commuter costs for drivers or resolve traffic congestion. For instance, in the US 107,40,210 people drive alone to work. Only 3,692,559 ride a bus: http://www.theatlantic.com/business/archive/2013/12/how-america-gets-to-work-in-1-very-long-graph/282349/
Here’s a report touting BRTs in Latin America but gives the following disclaimer: “This report aims not to portray BRT as a miracle technology but rather a cost-effective, incremental improvement on the traditional setup of Latin American urban bus mass transit.” http://www.coha.org/bus-rapid-transit-and-the-latin-american-city-successes-to-date-but-miles-to-go/
The missing transportation mode to concentrate on for lowering commuting costs and increasing efficiency is transferring single occupant drivers into narrow highway capable cars from side by side seated cars.
“in the US 107,460,210 people drive alone to work. Only 3,692,559 ride a bus”
You wouldn’t happen to have equivalent figures for a country that provides better overall transport choice than the US, would you?
It’s a bit like saying, because there’s lots of sand in the Sahara Desert then the world must be a very sandy place.
Apparently in Switzerland, only 50% of commuters drive to work http://www.swissinfo.ch/eng/commuting-on-the-rise-in-switzerland/3311842
I found this about single occupant commuting in England where population per square mile is far denser than in the US: http://www.statista.com/statistics/314733/single-occupant-car-journeys-in-england/
It’s likely that the SOD commuting numbers are much higher given the fact that this study is far all journeys as opposed to just to and from work.
The consistency of the numbers in densely populated England suggests that anywhere there are cars and roads, single occupant drivers like what they do and keep doing it regardless of cost. Whatever mode alternative is offered better have the same key attributes as driving alone or else it won’t make significant change.